Housing: 100% Down

FI Heroes became a Super Team in 2008 when we got married. At that time, the next logical step, according to society, was to move out of our cheap apartment and get a house. After all, the best investment you can make is your house; right? Why pay the mortgage of your landlord when you can be building that sweet, sweet equity in your own home?

Imagine coming home to your own castle after slaving away in the cube farm all day.

We had good jobs, a high savings rate and checked off the marriage box. So there shouldn’t have been anything preventing us from just getting a house; right? Wrong.

You see, 2008 was actually not a good year economically. As you are probably aware, it was when the financial crisis destroyed trillions and trillions of wealth in the US in one fell swoop. People were getting foreclosed on, stocks crashed, the government had to bail out lots of companies and prices of homes were falling sharply.

The old rule that housing was always going to go up didn’t feel so real anymore. And it caused us to start questioning “the rules”.

Banks, the government and individuals all shared in the blame for creating this economic catastrophe. We were luckily on the sidelines witnessing the carnage.

Every month we kept seeing better homes come on the market at lower prices. A high percentage of these homes were foreclosures or short sales. People owed more than their house was now worth. It was really depressing to see even though we knew how incredibly lucky we were and we were thankful we didn’t pull the trigger just prior to the crash. (We came close, several times)

With our newfound skepticism, we didn’t want to “catch a falling knife” by buying a home only for its worth to fall even further. So we went as conservative as we could and only submitted lowball offers. We must have walked through 200+ houses and made offers on 20+ of them. We focused on value and ignored thinks like paint color.

The problem with lowballing our bids below where the market was as the time, is that it made our search take 4 years! We kept readjusting our value to be below market; then the market would fall some more. So we adjusted our expectations again and again…and again. Four years go by and we finally pull the trigger with an all cash offer.

Originally we were going to do a 20% down 30 year loan thing because that’s what we could afford. But eventually that turned into a 40% down 15 year loan thing. Eventually we got to this point where we just came to the conclusion that if we just wait another year we can avoid banks entirely and just do all cash. So that’s what we did.

A high savings rates give you options to do something outside the norm.

This wasn’t fun at all, and at times it felt like we kept moving the goal posts on ourselves. FI Girl thought I was stalling purchasing a home when I came up with the idea of 100% down. (Maybe it had something to do with the almost 7 years it took for us to get married before this whole house hunting thing.) In all seriousness, we just didn’t realize it was even a possibility until we actually ran the numbers ourselves. We knew our savings rate by month and the target price of the houses we were looking at, so we pretty much knew when we would have enough to pull the trigger.

When we moved into our 100% owned house it was a great feeling.

I know you are probably thinking that we had help. We didn’t. We accomplished this goal entirely with the income we saved throughout our 20s. In the end we bought the $500K+ 2700 square foot palace without the aid of external loans or family and somehow bought near the bottom of the market. (We did however take out small loans against our own 401Ks to put us over the top. More on that topic later).

What was strange, was in the end it wasn’t the home itself that made us happy. Setting a goal that many deemed as impossible and actually accomplishing it as a team was the true prize for us.

So there we were at 30, married and owning our home outright. Over the next few years we continued to have a high savings rate and worked like crazy (like really crazy) to continue increasing our incomes… except we didn’t really know what it all was for.

The home itself was alright, but it didn’t really bring us any new happiness. The only good part of the whole experience was knowing that we could accomplish the impossible together with our shared drive. For a few years we struggled to figure out the next “thing” that would drive us.

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